Disruptive Innovation And Managerial Cognition

Disruptive Innovation

Discuss about the Disruptive Innovation and Managerial Cognition.

Disruptive innovation can be defined as a process which forms a new market and also the value network while at the same time; it also disrupts the existing value network and the market. In course of the action, it uproots the existing and the established business. The term was first defined at the beginning of 1995 by Clayton M. Christensen and his group of collaborators after which it was named as an influential business idea (Christensen et al. 2016). This is also important to note that every innovation may not necessarily be a disruption. The innovation will be termed as disruption only when the concept was held a success and has brought revolution to the target industry by weakening the established businesses. There are a few notable examples of disruptive innovation which created revolution and are still the choices for customers. Few of such examples include iPads, Google Apps, Skype, Netflix, Tata Nano, Zynga and Pandora (Vecchiato 2017). It looks like that disruption means an assured success for the technology introduced as the disruptive innovation. This study is aimed at understanding the key drivers of disruptive innovation. The aim is served through a constructed study which covers a conceptualisation of disruptive innovation. The study gives a few examples of successful disruptive innovation to help readers understand the concept more effectively. It is followed by a study on the key drivers of disruptive innovation. At the end, the study summarises the entire study in the conclusion section.

There can be a lot of question on the disruptive innovation whereas there can be different voices as well answering those all questions. This is indeed difficult to validate the one answer. It is also very challenging to consider every single answer as the most suitable ones. Interestingly, the founder of the name disruptive innovation, Clayton Christensen, explains that the term is widely misunderstood. According to the professor, the term was wrongly labelled with businesses on few instances. For example, Uber is often considered a disruptive innovation. However, it is not so as according to Clayton, the ride-hailing app is never termed a disruption in his book of 1997, The Innovator’s Dilemma (Henderson 2006).

The theory as defined by Clayton states that disruptive innovation happens when smaller firms come with an idea never experimented before by reputed firms and targets the niche market. The concept slowly and gradually mounts to success. Bigger companies instead focus on taking advantages from profitable areas. They keep a safe distance away from being experimental. Startup business as defined by Clayton struggles at the start; however, it manages to gain a foothold slowly and gradually. With this, the startup business actually starts tapping a new market which the bigger payers have failed to realise. The disruption is now in progress and it actually happens when the customers of reputed firms start preferring the start-up’s services and products (Henderson 2006).  

Examples of disruptive innovation

Christensen (2016) further clarifies that it never means that bigger companies do not use innovation, those rather. Those firms do it to maintain their service quality and keep their existing customers satisfied. Bigger companies do also innovate; however, such innovation will be termed a sustained innovation. Such innovation can be really big and incremental as well from both the employer’s and the customer’s perspectives. However, loyal customers are specifically targeted with sustained innovation. The main difference between the bigger companies and the startup companies is a fact that startup firms exploit technologies in thoroughly different ways. For example, Netflix was unconventional when it moved away from the old system to provide DVDs on a rental basis to streaming the video on-demand. The quality of service may be inferior to the existing format; however, once it picks up and the quality is improved as well, this will certainly become the reason for industry disruption (Henderson 2006).

IPads: It is one of the disruptive innovations for many reasons. It has made things easier for people which were never done before. It is very user-friendly and can be effectively used by people of every age group. It is disruptive in a way that lot of people now purchase this and use it like a small portable computer. It has affected the sales of home PCs and laptop (Hutchison and Colwell 2016). Works as such trading of some stocks, writing a novel, making up important spreadsheet and usage as for internet is now possible with IPads. There are many tasks which a large section of customers do on their laptop and PCs such as internet surfing, Facebook activities, products purchasing, sending e-mails, play games and watch the videos. For those customers, IPads made their laptops and desktop an obsolete fact (Campbell 2018).  

Skype: Skype was developed in 2003 by the Skype technologies which later on acquired by Microsoft. It was indeed a massive disruption when Skype was introduced. Before the Skype had entered the market, international calls were lot costlier. Per minute cost of call is now close to near zero which is evidently the impact of Skype. Now, there are more other apps like Whatsapp, Imo, Nimbuzz, Messenger, hangouts and lot more which support the video calls (McClure et al. 2015). However, the real disruption was brought and introduced by Skype only. Skype had presented an example with the help of a concept that took away a high market shares from the traditional telecom service providers. It actually provided calls with good audio quality which was far much better than the traditional calling system. The combination of Skype and Webcams had both done the disruption in the telecom industry (Bexci and Subramani 2015). People have now developed the habits to make frequent audio and video calls, a fact which was seldom seen before the advent of Skype. Interestingly, it is also used to interview applicants by even being at a longer distance. People can also do chats while they are in the network. They can continue with chat once they are available. User interface was lot simpler and had provided a handful experience to users. It has a massive directory where long histories can be stored (Bexci and Subramani 2015).       

iPads

Google Apps: This was another disruptive innovation which has collected the variety of apps at just one platform targeting the people with different age groups. It was beyond the imagination that accessing to hundreds of different things like e-books, games and lot more could be that much easier like the way it is now. It is very easy to use and the navigation to different apps is also very simple (Martínez-Pérez, De La Torre-Díez and López-Coronado 2015). Apps can be easily downloaded to devices such as phones and tablets. It is easy to use as well. It has actually accumulated many things at just one platform which was an unrealistic fact until the concept had arrived to the market. It costs near to no pricing. It is indeed only about the data consumption. Google apps do also provide huge storage limits. It can be accessed anytime by being at any place provided that, the internet is available. It can easily be integrated with Smartphone without any additional charges for it. It does not pose any limitation on accessing the platform. It rather gives a feeling of freedom as because limitless things can be done from it. There are apps to avoid spam messages and enhance the email security. It can also be integrated with Gmail (Whitehead and Seaton 2016).  

Netflix: It was a disruption in the DVD industry. Earlier, people have to purchase DVDs on rentals to watch their favourite movies. It was also a revolution considering a fact that watching movies had become easier then. People had no longer required being in theatres to watch their favourite movies and make huge expenses. They can then do the same by just bringing DVDs on rental. However, the concept had an issue because customers had to pay a huge penalty for not returning DVDs within the committed timeframe (Hallinan and Striphas 2016). This was actually a problem. Notably, disruption happens when an existing product or service has few problem areas. The fact sufficiently creates scope for others to accommodate (Hallinan and Striphas 2016). Netflix had taken the advantage from and introduced a new concept that facilitated watching of movies on a request basis. It did not just provide an option to book the favourite movies but had also enabled services like recommending the specific movies to the specific users. With Netflix, customers had no worries about paying for late submission of DVDs. It had actually freed customers from the burden of paying penalties. Netflix has kept on improving its services with the use of innovative strategies. They have improved their distribution system, the content programming and advance recommendation engine (Allen, Feils and Disbrow 2014).

Skype

There are few trends that drive for the disruptive innovation. Customer demands better service experience which is also one of the trends which make the difference. In irrespective of industries, customers are never fully satisfied with what they have and rather keep on demanding for an improved service. A better service means good quality of products or service at the competitive pricing (de Waal, van Nierop and Sloot 2017). This is why global firms across the world try their best to become both cost-effective and high in quality. This is indeed very challenging and requires a robust business model to have a good control of the supply chain operation. Aldi is one of the few examples which had steered the retail market in the United Kingdom and Australia with its cost-effective business model. The business model has helped Aldi to go the other way than the supermarket giants in both the UK and Australia. Aldi, unlike its competitors, is able to offer customers the quality products at a much lower price (de Waal, van Nierop and Sloot 2017).

Demand for a better user interface is another trend which drives the disruptive innovation. Before the advent of Online Shopping like Amazon, there was no clue of any other mode of shopping than physical stores. The changing consumer behaviour for shopping experience and the incrementing usage of internet had actually provided space to online shopping (Thananuraksakul 2018). Shopping was never easier the way it is right now. Customers can easily compare products in multiple regards such as in terms of price & specifications. The process is simpler as well. The entire process involved in the online purchase is very simple and just require a few steps to follow. Online shopping now holds a huge market shares and has also notably affected the brick & mortar stores. Customers, in particular, Millennials love the concept and see this as an ultimate option to purchase anything they need like foods, clothes, electronic gadgets and others (Fang et al. 2016).

Customers purchase products is now much faster than ever before. This has also ignited the disruptive innovation. Interestingly, customers can have their access with variety of products in quite a few times. This is due to the unprecedented distribution of products through various channels like online advertisements, TV advertisements, PR advertising and much more (Al-Sharif, Qwader and Al-Slehat 2017). The stated fact is itself a reason for companies becoming desperate for robust channels for reaching to millions of customers. The faster the distribution of products is the more will be the chances for purchase. For example, some of the mobile phone brands are sold at much faster speed than others. These are the phones which are made available to customers on the internet only. Effective promotion strategy creates the much-needed buzz needed to make the sales to happen (Al-Sharif, Qwader and Al-Slehat 2017).

Google Apps

According to Reinhardt and Gurtner (2015), despite the significant amount of research works and the publications, a consensus of what disruptive innovation is has not yet been reached. The authors have clearly explained the phenomenon which happens along with an innovation being sought as a disruptive technology. As per the authors, established firms tend to continue with sustained innovation because their customers always expect continued quality products and services. The rising expectation of customers from their selected firms creates a continued pressure on firms to increasingly rely upon the sustained innovation. The authors have argued the fact presented by Christensen (2016) and said that disruptive innovation as being defined by Christensen (2016) is not only a form of disruptive innovation and that innovations unidentified as disruptive, can never be the disruptive innovation. As opined by Reinhardt and Gurtner (2015), disruptive innovation performs averagely at the start; however, picks up later. Disruptive innovation as according to Reinhardt and Gurtner (2015) addresses the low-end markets.   

Boston-Fleischhauer (2015) has gone the other way and has rather focused on stating the ways to incorporate the disruptive innovation at the organisational level. According to the author, disruptive innovation can be extremely beneficial for both company’s and the employee’s perspectives. There is just a need for incorporating the relevant skills, tools and the data, so that, employees are trained on the best process specifically designed by the management to attain the goal. In this way, employees will have a chance to groom their experience as a quality performer whereas employers will edge past its competitors due to the disruptive innovation. However, paths for both employers and employees will be critical and is expected to face a lot of challenge. At the early stage, disruptive innovation will be relatively weaker than the established innovation in market. It actually takes time before customers start realising the significance and the benefits of the disruptive innovation.

Carayannis, Sindakis and Walter (2015) have supported the views of Boston-Fleischhauer (2015) by stating the needs for incorporating the excellence with the organisational business model innovation (BMI). Carayannis, Sindakis and Walter (2015) have identified that organisation with the capability to integrate its BMI with marketing strategies has the better chances for a technological transition. Integration in this context means the exhibiting of skills needed to be explored at both the operational and the marketing level. A skilled workforce and an entrepreneurial leadership will only help in both organisational and the market level operations. To summarise, there is a need for supportive operation and also the effective marketing capabilities to actually initiate or introduce the disruptive innovation.

Netflix

As opined by Mohr and Khan (2015), 3D Printing technology will have its disruptive impacts on the future supply chains.  The impact will be observed in seven different areas such as follows:

Table 1: Impact of 3D Technology

(Source: Mohr and Khan 2015)

3D printing can even reach to locations which are inaccessible by any other means. Examples include the flood affected areas. Mohr and Khan (2015) have not just supported the significance of disruptive innovation but have also highlighted the future prospects for 3D printing. Manufacturers will not suffer from challenging circumstances and will rather enjoy for an uninterrupted flow of materials. The authors expect the contemporary managers as accepting the 3D Printing.  

According to Kaltenecker, Hess and Huesig (2015), IT sector has always remain surrounded with disruptive technologies in the form of innovative software and hardware. Authors have supported their point by citing an evidence in the advancement of cloud computing. Cloud computing was never thought of as to offer more innovative surprises to its clients and employers. However, Software as a Service (SaaS) model is the one thing that was never imagined before. A few years ago, there were no clues on what would be the future developments in the cloud computing technology. The authors Kaltenecker, Hess and Huesig (2015) has supported the facts for disruptive technology as presented by Christensen (2016) by saying that the IT industry will keep on tracing disruptive innovations for a fact of never ending competition for advanced software and hardware.

Conclusion

In summary, the study has found a few contradicting thoughts over the existence of disruptive innovation. Some opinions go against the concept presented by Clayton Christensen (2016) who actually initialised the term disruptive innovation at the beginning of 1995. It was argued by Reinhardt and Gurtner (2015) that disruptive innovation is for smaller business and is suitable for a niche market. Reinhardt and Gurtner (2015) have further said that despite being so many publications on disruptive innovation, there is still no consensus to define the disruptive innovation. Hence, the definitions and the concepts will also vary accordingly. On the other hand, others have more or less supported the importance of disruptive innovation. Two of the most highly-rated technologies such as 3D Printing and Cloud Computing with SaaS were identified in this paper. 3D Printing was found as a disruptive technology in this study for a fact that it would transform the manufacturing experience. Manufacturers will not worry anymore about the inflow of materials which was a case initially especially in times of natural disaster like floods. 3D Printing can reach to such places also. Cloud computing with SaaS was also identified as a disruptive innovation in this study. Cloud with SaaS was never imagined before. People actually had no clues of it a few years before. However, it is now established as a potentially disruptive innovation.

References

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